As Bill Archer once said, “we must care for each other more and tax each other less.” Nothing is more true than that. The problem is that taxes can seem like an unavoidable reality. Of course, we will never fully avoid paying taxes so long as they are necessary to run a functioning society. However, there are different tax philosophies and approaches to determine who owes what. In fact, this discussion of taxes is one of the most hotly debated issues in our country.
To add to the problem, taxes can be complicated and confusing for most to navigate. Not to mention they are a burdensome financial reality to face. For many, the only control they exercise over their taxes is preparing them correctly when tax season comes. The good news is that, in fact, you can have more control over the amount of taxes you pay in retirement than you may realize.
Rather than beating around the bush, let’s talk directly about what the research shows about how to successfully enter retirement with minimal tax risk and liability. There is a term known as “tax-advantaged retirement planning.” The idea is rather than focusing solely on smart investing early on, you take into account the tax character of the accounts that money is invested in and plans to reduce these in strategic ways.
Basic financial planning ensures you are invested well and accruing steadily in the growth phase. Tax-advantaged planning ensures that your taxes will be as low as legally possible in the withdrawal phase.
USING LIFE INSURANCE AS A RETIREMENT FUND
Most people think of life insurance as something that will help those you love after you die. While this is true, life insurance can also help reduce your taxes while you are alive. The growth on your money within a life insurance policy is tax-free. Additionally, earnings that grow within a life insurance policy will not cause an increase on your social security taxes. 
The truth is that life insurance is one of the single biggest benefit in the tax code for retirees. Some have gone so far as to say that life insurance is essential for retirement planning.2 And it can be the most cost-effective way to protect a large IRA. One of the most beneficial aspects of obtaining a permanent life insurance policy is that you have lifetime access tax-free to the cash value of that policy. Most retirement funds keep the majority of your money trapped by penalties and taxes. Not so with money invested in a life insurance policy.
LIFE INSURANCE HELPS YOUR FAMILY
Let’s circle back to the benefit for your loved ones. The right life insurance policy allows your beneficiaries to receive the death benefit income tax and estate-tax free. Do you know of any other investment that does that? Furthermore, this money does not pass through a will and therefore cannot be contested in legal proceedings. This is dramatically different than what happens to the balance of remaining IRAs and qualified retirement plans. With those accounts, your beneficiaries can lose up to $0.35 of every dollar! 
BUT WHAT ABOUT A ROTH?
Retirees often have a ROTH IRA they are quite proud of. ROTHs can be useful for certain things and definitely have merit. However, many of the benefits you would get from investing in certain life insurance policies are not available from a ROTH IRA.  Just take a look at this chart comparing ROTHs with a type of insurance called Indexed Universal Life (IUL):
No Contribution Limits
Favorable Access To Cash Value
Tax Free Survivor Benefit
Estate Tax FREE When Set Up Properly
Principal Risk Exposure
Annual Income Limits
Early Withdrawal Penalty
May Be Subject To Estate Tax
As you can see, the benefits over a ROTH are apparent. With principal protection, unlimited contribution possibilities, and access to your cash value, why wouldn’t you use this type of retirement savings strategy for yourself? Remember that it’s not only you and your spouse that benefit; the incredible advantages of life insurance are for your family once you’re gone. No one wants their children worrying about taxes and division of assets in the courts while they’re grieving. That’s why smart retirees use life insurance as a workaround considering it does not pass through a will AND is estate tax-free. 
WHY DOESN’T EVERYONE HAVE THIS?
At RGA, we’re often asked, “why doesn’t everyone use life insurance this way?” The answer is, we don’t know. Our guess is that they simply do not know about the benefits. In some cases, a person may not qualify because of serious health issues. However, in our experience, most people qualify. So, if you’re reading this wondering if it makes sense for you to obtain a life insurance policy with these unique benefits, find out today. Why wait? You can obtain the growth, security, and tax-workaround benefits for yourself. It could be the first step toward your dream retirement with you paying as little tax as possible.